Overview
Salary negotiation is the collaborative process of agreeing on compensation between employer and candidate. For engineers, this often includes base salary, equity, signing bonuses, and benefits—total compensation can vary dramatically between seemingly similar offers.
Effective negotiation serves both parties: candidates want fair compensation that reflects their market value, while employers need to balance competitiveness with budget constraints and internal equity. The key insight is that negotiation shouldn't be adversarial—it's about finding alignment.
Companies that approach negotiation transparently see higher offer acceptance rates, faster hiring, and better retention. Those that play games—lowballing, slow-rolling, or penalizing negotiation—damage their employer brand and lose top talent to competitors who respect the process.
Why Salary Transparency Wins
The old model of compensation secrecy is dying. Colorado, California, New York, and Washington now require salary ranges in job postings. But legal requirements aside, transparency is simply better strategy for hiring engineers.
The Case for Publishing Ranges
When you publish salary ranges upfront:
- Self-selection works for you: Candidates who can't accept your range don't apply, saving everyone time
- Trust starts immediately: You demonstrate respect for candidates' time before they even apply
- Negotiations are faster: Less back-and-forth when expectations are already aligned
- You attract better candidates: Top engineers specifically seek out transparent companies
When you hide compensation:
- You waste interview hours: Candidates discover misalignment after multiple rounds
- Trust erosion begins: Candidates assume you're hiding something (they're often right)
- Negotiations drag on: Extended back-and-forth when anchors aren't set
- You lose to transparent competitors: Given equal options, candidates choose clarity
How to Set and Communicate Ranges
Effective salary ranges are:
- Anchored to market data: Use sources like Levels.fyi, Glassdoor, or compensation surveys
- Wide enough to be real: A $150K-$200K range is useful; $150K-$152K is insulting
- Matched to level definitions: Clarify what qualifications warrant each part of the range
- Inclusive of total comp context: Note if the range includes bonus targets or is base only
The Negotiation Process
Before the Offer Call
Preparation determines outcomes. Before making any offer:
1. Know your numbers:
- What's the budget for this role?
- What's the approved range top-to-bottom?
- What does total comp look like (base + equity + bonus)?
- How does this compare to existing team members?
2. Research the candidate:
- What's their current compensation (if they shared)?
- What do their competing offers look like?
- What's their stated preference (equity-heavy vs. cash)?
- Any unique circumstances (relocation, visa, etc.)?
3. Prepare your opening:
- Lead with total comp, not just base
- Have equity details ready to explain
- Know what's flexible and what's firm
- Have approval for common negotiation points
The Offer Conversation
This call sets the tone for the entire relationship. Best practices:
Be genuine, not scripted: Candidates can tell when you're reading from a playbook. Express actual enthusiasm about having them join.
Present total compensation: Don't just say "$180K base." Walk through the full picture: base, equity value, vesting schedule, bonus structure, benefits.
Give them time: Never pressure for immediate answers. Strong candidates need time to evaluate—rushing signals desperation or manipulation.
Answer questions directly: If they ask about flexibility, don't deflect. Be honest about what's negotiable and what's fixed.
When They Come Back with a Counter
Counters are normal. Don't take them personally or interpret them as lack of interest. A candidate who negotiates is a candidate who wants to accept—they just need the right package.
Evaluate the counter objectively:
- Is it within your approved range?
- Is it market-appropriate for their level?
- Does it create internal equity issues?
- What's the cost of losing them vs. meeting them?
Respond thoughtfully:
- Don't counter-counter immediately; take time to consider
- If you can meet them, do it cleanly—avoid nickel-and-diming
- If you can't, explain why honestly
- Offer alternatives if base is fixed (signing bonus, equity, level bump)
Common Negotiation Scenarios
The Candidate with Multiple Offers
Situation: Strong candidate has competing offers, often from well-known companies paying market rates or above.
Approach:
- Ask what matters most to them beyond compensation
- Differentiate on mission, team, growth, scope—not just money
- Be prepared to move fast; they won't wait weeks
- If you can't match comp, acknowledge it and focus on other value
- Don't trash competitors—candidates notice and judge
Mistakes to avoid:
- Slow-playing when they've told you about deadlines
- Assuming they're bluffing about other offers
- Trying to match FAANG comp without FAANG resources
The Internal Equity Challenge
Situation: Candidate's ask would put them above existing team members with similar experience.
Approach:
- Be honest: "Your ask is above our current band"
- Explain context: "Here's how our bands work and why"
- Offer alternatives: "I can offer X base plus Y signing bonus"
- Consider the system: Maybe your bands need updating
- Don't make it their problem: "I can't pay you fairly because I underpay others"
Mistakes to avoid:
- Rejecting strong candidates to protect broken comp structures
- Promising future raises instead of fair starting pay
- Using internal equity as excuse when budget is the real issue
The Candidate Who Won't Give a Number
Situation: Candidate asks for your range and won't share their expectations.
Approach:
- This is fair—the power dynamic favors employers
- Share your range and level expectations clearly
- Ask what total comp package would make them excited
- Focus on learning what they value, not a specific number
Mistakes to avoid:
- Playing chicken; somebody has to go first
- Penalizing them for reasonable boundary-setting
- Assuming they're hiding outrageous expectations
The Surprised Candidate
Situation: Candidate receives offer significantly below expectations despite no range being shared.
Approach:
- Take responsibility: "We should have aligned on this earlier"
- Ask what they were expecting and why
- Explore if there's a path to agreement
- If there isn't, part professionally—don't get defensive
- Learn from it: publish ranges next time
Mistakes to avoid:
- Blaming them for "unrealistic" expectations
- Trying to convince them their expectations are wrong
- Burning bridges with defensiveness
Equity vs. Base Tradeoffs
Understanding Engineer Preferences
Engineers evaluate equity differently based on:
- Risk tolerance: Senior engineers with financial cushion may prefer equity upside
- Company stage: Startup equity is speculative; public company equity is liquid
- Family situation: Parents often prefer cash certainty
- Trust level: Have they seen equity become worthless before?
- Timeline: How long until liquidity?
How to Have the Conversation
Be honest about equity:
- What's the current valuation and basis?
- What's the vesting schedule and cliff?
- What are realistic liquidity scenarios?
- What's the dilution trajectory?
Offer real flexibility:
- Can they choose more equity/less base or vice versa?
- What's the exchange rate between the two?
- Is there flexibility in equity type (ISOs vs. RSUs)?
Avoid manipulation:
- Don't oversell equity value without basis
- Don't pressure toward equity to save cash
- Don't penalize candidates who prefer cash
Red Flags in Equity Conversations
Candidates (especially experienced ones) watch for these warning signs:
- Refusing to share cap table or option pool details
- Valuing equity at recent fundraise price without context
- Aggressive cliff or vesting terms
- Inability to explain dilution
- No clear path to liquidity
Handling Counter-Offers
When Candidates Get Countered by Current Employer
Situation happens frequently: you extend offer, candidate resigns, current employer counters.
Proactive approach:
- Discuss this possibility during offer conversation
- Understand their reasons for leaving beyond compensation
- Ask how they'd feel about accepting a counter
- Plant seeds: "Counter-offers often delay departure 6-12 months, not prevent it"
When it happens:
- Don't pressure or ultimatum
- Remind them why they wanted to leave
- Give them space to think clearly
- Accept their decision gracefully either way
Reality check:
- Statistics show 50-80% of counter-offer accepters leave within 18 months
- But this specific candidate might be different
- Respect their autonomy to make their own choice
When You're Counter-Offering
If your engineer gets a competing offer and asks to match:
First, understand the situation:
- Is this about money or are they unhappy?
- What's driving them to look?
- Is the competing offer real and accurate?
- What would retention actually require?
If you decide to counter:
- Address root causes, not just comp
- Make the retention offer comprehensive
- Consider promotion if warranted
- Document commitments in writing
If you decide not to counter:
- Be honest about why
- Thank them for their contributions
- Facilitate smooth transition
- Don't burn bridges—they might come back
Building a Fair Compensation Culture
Process Over Individuals
Fair negotiation isn't about individual conversations—it's about systematic practices:
Standardized bands: Every role has defined ranges based on market data and internal equity. Bands are reviewed annually.
Clear rubrics: What puts someone at bottom vs. top of band is documented and applied consistently.
Approval workflows: Managers can't make one-off deals that break equity. Exceptions require leadership review.
Regular audits: Compensation is reviewed for demographic disparities. Gaps are addressed proactively.
Training Your Team
Everyone involved in offers needs alignment:
- Recruiters: How to discuss comp expectations early
- Hiring managers: How to evaluate counters fairly
- HR/Comp team: How to balance flexibility and equity
- Executives: When to approve exceptions
Measuring Success
Track metrics that matter:
- Offer acceptance rate by role and level
- Time from verbal offer to signed
- Negotiation frequency and outcomes
- Regrettable declines (great candidates lost on comp)
- Retention by initial negotiation outcome